Gov. Sarah Palin vetoed FY 2009 capital projects for Anchorage and Fairbanks that used more than $3.5 million each in impact funds, including funding for a Ship Creek project.

How and where over $32 million in Alaska’s “Regional Cruise Ship Impact Fund” can be spent was one of several questions the Senate Finance Committee discussed with Tax Division Director Johanna Bales at a Jan. 30 status hearing.

Concerns also include the eligibility for impact funds of cities like Ketchikan and Juneau that are ineligible for the $5-per-passenger shares of the head tax that go to the first five ports of call on a cruise ship voyage if they impose a local head tax. The Impact Fund has been growing by more than $11 million annually on proceeds from the $46 cruise ship passenger “head tax” and the 33 percent tax on shipboard gambling revenues, both imposed in 2006 with passage of a citizen initiative.

Impact fund disbursements are limited by law to cities and government entities “impacted” by cruise ship activity, but Bales said the current $32 million account balance “is pretty much sitting there until decisions are made on how to spend that and what an impact community means.” It is the department which will make the decisions.

Fairbanks Sen. Joe Thomas said his constituents voted for the head tax initiative with the expectation Interior cities would also be eligible for impact funding. He said 60 percent of cruise ship passengers visit Fairbanks during their Alaska vacations. Bales said federal constitutional questions on restraint of trade and other issues cloud Impact Fund spending. Finance Committee Co-chair Ralph Stedman (R-Sitka) noted Gov. Sarah Palin did not mention constitutional questions when she vetoed FY 2009 capital projects for Anchorage and Fairbanks that used more than $3.5 million each in impact funds. The governor labeled the projects “low priority.”

With annual cruise ship passenger visits just passing the million-person mark, the head tax is raising just over $46 million per year. First returns on the gambling tax on adjusted gross income, were due last April 15. Actual revenues for 2007 totaled $6.8 million. There are no constitutional restrictions on spending of these funds, Bales noted. First returns on the corporate income tax were also due on April 15 but even total income from the levy can’t be disclosed due to statutory confidentiality protections for the small number of tax payers, Bales said. Income tax revenues are not subject to any revenue sharing provisions and are deposited in the General Fund.

Source: Alaska Legislative Digest

Scroll to Top